Hallador Energy’s Successful Transition to an Independent Power Producer

Hallador Energy, a company that has historically focused on bituminous coal production, has made significant strides in transitioning its business model to become an integrated independent power producer (IPP). The company’s first quarter results for 2025 demonstrate the upside of this strategic shift, as Hallador was able to capitalize on higher energy prices and increased coal production during the period.

Strong Financial Performance in Q1 2025

In the first quarter of 2025, Hallador generated $117.8 million in revenue, an increase of $6.2 million compared to the same period a year ago. The company also saw a significant improvement in adjusted EBITDA, which grew by $12.5 million to $19.3 million. This strong financial performance was driven by several key factors:

1. Increased Energy Volumes and Prices: During the winter months of January and February, Hallador benefited from higher energy prices and was able to deliver more energy volumes, thanks to its transition to an IPP model.

2. Improved Coal Production: Hallador’s 2024 restructuring efforts continued to pay off, as the company saw improvements in its coal production throughout the first three months of 2025.

3. Leveraging Relationships with Counterparties: The company was able to supplement periods of weaker pricing with limited sales of firm energy, which helped to mitigate the impacts of inconsistent weather and fluctuating natural gas prices.

Ongoing Negotiations for Data Center Development

A significant focus for Hallador is its ongoing negotiations with a leading global data center developer for the supply of a substantial portion of the Merom Power Plant’s output. The company believes it is making meaningful progress towards the execution of definitive agreements, with the current exclusivity period running through the beginning of June 2025.

While Hallador remains encouraged by the progress and believes the current development partner represents a tremendous long-term opportunity, the company is also evaluating other potential opportunities should it be unable to finalize the definitive agreements by the end of the exclusivity period. Hallador is committed to forging a strategic partnership that will create significant value for the company and its shareholders.

Enhancing the Value of Hallador Power

Hallador believes that the industry trend of retiring dispatchable generators, such as coal-fired plants, in favor of non-dispatchable resources like wind and solar will lead to an unbalanced energy equation and extended volatility in the energy markets. The company sees this volatility as an opportunity to enhance the value of its Hallador Power subsidiary, which provides reliable and dispatchable energy.

To further capitalize on this opportunity, Hallador is actively seeking to acquire additional dispatchable generation assets, which it believes will help diversify its risk and provide more opportunities for strategic deals. The company is also exploring the potential of adding natural gas co-firing capabilities to its Merom Power Plant, which would allow it to take advantage of the best fuel cost scenario and provide increased resiliency during times of limited gas availability.

Solid Forward Sales Position

Hallador has a strong forward sales position for both its energy and coal operations. For 2025, the company has contracted approximately 3.0 million MWh of energy at an average price of $37.20/MWh, and 3.4 million MWh for 2026 at an average price of $44.43/MWh. The company is optimistic about its ability to sell energy at higher prices in support of data center development and/or to traditional wholesale customers in line with the indicators of a higher forward curve.

In the coal segment, Hallador has contracted 7.71 million tons of coal at an average price of $50.95 per ton for 2025, and 8.72 million tons at an average price of $51.00 per ton for internal use at the Merom Power Plant.

Continued Improvements in Coal Operations

Hallador’s coal operations have seen significant improvements as a result of the restructuring efforts announced in the first quarter of 2024. The company has optimized production, headcount, and strategy to better support its electric operations and existing third-party coal contracts.

While Hallador currently expects to produce approximately 3.8 million tons of coal in 2025, the company is evaluating the potential to increase production in the back half of 2025 and/or 2026 if market conditions continue to improve. The company’s ability to obtain low-cost coal from both internal and third-party sources, while capturing upward swings in the commodity markets, should help maximize margins and optimize fuel costs at the Merom Power Plant.

Outlook and Strategic Initiatives

Hallador remains excited about the continued transformation of the company from a commodity-focused coal producer to an IPP. The company believes this transition provides a significant opportunity to capture the expanding margins of the energy markets and capitalize on the growing demand for electricity, particularly from data centers and other high-density power users.

The company is actively evaluating additional strategic transactions that could add durability, scale, and geographic expansion opportunities to its electric operations. Hallador believes it is uniquely positioned to transform retiring and/or underperforming assets into future opportunities, enabling it to supply high-demand end users while supporting the overall reliability of the grid.

The positive momentum from the current federal and state administrations is expected to make such transactions more feasible than they would have been under prior administrations, further bolstering Hallador’s growth prospects.

Key Highlights

• Q1 2025 revenue of $117.8 million, up $6.2 million from Q1 2024
• Adjusted EBITDA of $19.3 million, up $12.5 million from Q1 2024
• Ongoing negotiations with a global data center developer for a significant portion of Merom Power Plant’s output
• Actively seeking to acquire additional dispatchable generation assets and exploring natural gas co-firing capabilities at Merom
• Solid forward sales position, with 3.0 million MWh of energy contracted for 2025 at $37.20/MWh and 7.71 million tons of coal contracted at $50.95/ton
• Continued improvements in coal operations through restructuring efforts
• Positive outlook for future growth and strategic initiatives, supported by favorable industry and political trends

Overall, Hallador’s first quarter results demonstrate the success of its transition to an IPP model and the company’s ability to capitalize on the evolving energy landscape. With a strong forward sales position, ongoing strategic initiatives, and a focus on enhancing the value of its reliable and dispatchable energy assets, Hallador appears well-positioned for continued growth and value creation.